The Sweeper: MLS Owners Speak Out On Strike

An MLS ownership group has finally spoken out about the possibility of a strike by the players. Tim Leiweke, long-time chief executive of Phil Anschutz’s AEG (who own the LA Galaxy and half of the Houston Dynamo), expressed amazed consternation that the league’s employees could be so ungrateful: “It would have been easy for us to quit over the last 10 years,” he said. “There were five different times we could have called it a day. But we didn’t. We fought through it.

“So for them [the players] to suddenly threaten that they’re going to shut it all down, I’m a little amazed at the lack of respect they show for the commitment that we all have made to get the league to where it’s at today.”

“So when I hear them talk about striking and shutting the league down, I’ve got to tell you, they’re going to lose us when they talk like that.

“We do this out of passion. If this were a business, we would have quit this 10 years ago.”

(The Womens Professional Soccer players recently left without a team to play for as AEG abandoned the LA Sol might find Leiweke’s comments rather ironic. But that’s another story.)

AEG aren’t fooling anyone by claiming they are in this for the passion and not the business, as if this entire soccer venture was a tax write-off for Uncle Phil Anschutz, who didn’t become America’s 37th richest man through benevolence.

Obviously, AEG’s passion for the sport over business demands doesn’t extend to building stadiums without stages to suit the other parts of their entertainment business.

As one senior AEG executive recently put it, “There’s an expectation that all our assets will be good enterprises and profitable. There’s no charity involved.”

Of course, there shouldn’t be. The Galaxy are sometimes said to be profitable, sometimes not. If Leiweke is right and soccer is not a business for AEG, the sport probably doesn’t have much future in the United States; relying on a billionaire’s ongoing passion is not the way forward. It needs to be a successful business, which is why owners aren’t relenting on the players’ demands anyway, why several stadiums have those stage ends, and why Soccer United Marketing exists. Those aren’t bad things, but they’re about more than just passion for the sport.

And true, a huge loss-leading investment by Anschutz and Lamar Hunt was absolutely crucial to the league’s survival in its early years; the question is, do today’s players owe AEG something for that?

The fact is, the players, like most workers, don’t have a whole lot of leverage here except for threatening not to work. Appealing to Phil Anschutz’s best nature with nicely written letters from their mothers probably isn’t going to cut it. AEG are a $1 billion business that has decades of experience in litigation, with Anschutz described by one businessman who actually won a case against AEG as a man “will cut your legs out from under you”, according to this 2006 LA Times piece:

Like many aggressive businessmen, Anschutz also has acquired his share of adversaries. His litigation record reveals a sharp-elbowed tycoon willing to pay to make disputes go away and to keep his public image intact.

During the last three decades Anschutz has paid cash settlements — all of them confidential — to companies that claimed they were denied their fair share of profits or were done in by deceptive business practices, according to interviews and courthouse documents in California, Colorado and Wyoming.

Among the settlements was a multimillion-dollar award to Mel Gibson, who alleged that the theater chain Anschutz controls cheated the actor’s distribution company out of revenue from the hit movie “The Passion of the Christ.”

George Ablah, 77, a real estate magnate and fellow native Kansan, prevailed in a legal tussle with Anschutz over a failed oil and gas partnership.

“He is very tough,” Ablah said of Anschutz. “He thinks he is God. If you question him in any way, he will cut your legs out from under you…. He is extremely lucky with those tactics. It has worked out very, very well for him.”

As Fake Sigi says today about Leiweke’s comments, “The owners look like they’re going to stand firm.” There’s nothing wrong with that, but the players make their living out of this sport and have every right to treat it as a business and not make concessions based on AEG’s track record or passion for the sport, as Leiweke implies they should; it’s not a “passion” for the players, it’s their workplace. They might not be paupers, but an $80k median salary in a career that lasts a decade or so means they don’t have the luxury to take the long view in the same way as Phil Anschutz, sitting on $7.2 billion.

Quick Hits

An interesting interview here with the Chester City fan running the Supporters’ Trust attempting to resurrect the team, explaining how they lost patience with ownership: “The final straw for many was the one-minute’s silence that was held for what was a “major benefactor” of the club, which, upon investigation, turned out to be the death of a drugs baron from Liverpool who had been assassinated by a South American mob. This was a person we were holding a respectful minute’s silence for?”

Amusingly enough, FIFA actually has an “ethics chief”, who have written to 2018 and 2022 World Cup bidders and told them to play fair. Just like Sepp and Jack do, obviously.

The Sweeper appears daily. For more rambling and links throughout the day every day, follow your editor Tom Dunmore @pitchinvasion on Twitter.

The WPS mention was an aside, and I actually got some pretty heavy criticism for giving AEG’s side when the news broke. But the point there (and here) remains that this soccer stuff is a business for AEG, in MLS or WPS. Did AEG show passion for the sport when they moved the Earthquakes to Houston? You could argue it a lot of ways, but the ultimate reason was the bottom line of the decision. Now, AEG are free to do business as MLS allows them, but they can’t pretend this is some kind of simple philanthropic venture by Phil Anschutz that the players should cut their demands to “respect”.

To be fair: ( a) Almost all of the LA Sol players have or will find work (of course it will be at the expense of somebody else) ( b) Obviously, there are more jobs in WPS this year than last ( c) We may be assuming facts not in evidence, as at least one report had WPS knowing from the get-go that AEG was only in the Sol for one year.

That said, Leweike makes good, if not particularly apropos, points. I just wish they’d impose a gag order on everybody.

March 16, 2010 at 11:10 amchuck

This it business. Talk of respect – as if the players must suffer eternally for the sacrifices of the owners – is garbage. MLS was a start-up; what large business owner expects to start up a national venture and make money in the first few years? None. Also, MLS was a start up in a new industry (soccer), in which case the expectaction for profit is pushed even futher down the timeline. The ownners knew what they were getting into and made a business decission. Talk that this whole venture could have folded is stupidly stating the obvious. A payer could just as easily say, “Hey, I could have made twice the money getting a “real” job but I busted by butt and sacrifieced to make this MLS thing work, now I deserve some respect.” Both made business decissions, life decissions. Neither’s decisions deserves any less or more respect than the others.

Besides, all this talk of profitability is smokescreen. Businesses often do not want to be profitable. Businesses are taxed on profit and can write off loss. Often, the closer a business is to breaking even the happier the owners are.

And in sports, operating with a loss is a time honored tradition. Fewer than half of NBA teams make a profit (http://www.nba.com/2009/news/07/14/stern.profit.ap/index.html). You don’t seem them demanding players work for peanuts and shut up and respect the owners for the sacrifices they have made until the entire venture is profitable, do you? So long as an investment is growing (in popularity, market share, revenue, and value), the investors will stomach loss – and often lots of it. Last I checked potential owners were paying $10m for a chance to get into the club and $30m for a franchise. Red Bull paid $100m. Anschutz sold a 50% ownership stake in the Dynamo a few years back for $45m. Forbes valued the Galaxy a few years back at $100m. Either 1) this is a bubble, or 2) value really is increasing, thus owners will stomach operating loss, thus statements that the players must not demand a greater slice of the pie or a more fair system until the league achieves profitability are disengenuous.

March 16, 2010 at 12:04 pmKT

I would say, to steal a line from someone else back in the mists, that AEG considers MLS to be too much of a passion to be a business and too much of a business to be a passion.

Here’s the question I have — what exactly are AEG and the other owners going to do if the players do decide to strike? What’s they’re leverage? Do they suspend union players from the league without releasing them from their contracts? Do they raid the 2nd division and Central America for replacement players to get union members to break rank? Do they cancel the season, which seems like an awfully stupid thing to do in a World Cup year?

Seems like the only thing the owners can do is just sit back and wait for the players to run out of money — and for most players not named Donovan, that might not take very long.

March 16, 2010 at 5:35 pmFake SIgi

This doesn’t add much to the discussion, but you’ve got that link to my site pointed at the wrong post.

-FS

March 16, 2010 at 11:23 pmBobby

What stops a club from breaking ranks, paying their players what they want, and stating that they intend to fulfill their schedule, thus potentially winning every match by forfeit?

Bobby: Probably the fact that the structure of MLS allows the league to own player contracts, not the clubs. The clubs can’t fulfill a league season in MLS if it’s not allowed to employ players directly.

The more I look at this, the more I wonder if Anschutz will encourage the league and its owners to go scorched earth on the union, like Ronald Reagan did to air traffic controllers in 1981. (“You have 3 days to return to work, or you’re all fired!”) At this stage, I wouldn’t put it past him, even if the only clear winners in that scenario are Everton and any NASL/USL clubs in need of free agents.

March 17, 2010 at 11:07 pmJoseph D'Hippolito

Dave, I don’t think Anschutz will go the “scorched earth” route. He would be cutting his own throat financially. Then again, he seems to have developed more of an interest in politics (Examiner,com, Weekly Standard), so he just might cut his ties to MLS altogether. Regarding Leiweke’s comments, most people in Los Angeles call him “Lie-weekly” (or “Lie-weakly”) for a reason. Isn’t this the same fellow who said that Beckham “paid for himself” solely with jersey sales? His game is intimidation — and when he uses the press for his purposes, he comes off like a spoiled brat. Just take a look at his comments when Beckham first contemplated going to Milan — and Donovan to Bayern Munich.